U.S. Stocks Rise as Internet Shares, Retailers Rally

U.S. stocks rose, sending the Dow Jones Industrial Average to a record, as Internet shares rallied and retailers gained on earnings. The euro fell to a one-month low and coffee capped the biggest weekly drop since March.

The Standard & Poor’s 500 Index rose 0.2 percent at 4 p.m. in New York. The Dow Jones Internet Index gained 1.3 percent, trimming a weekly slide to 3.6 percent, while the Dow Jones Industrial Average climbed 0.2 percent to an all-time high. The euro weakened 0.6 percent to $1.3757. Ten-year Treasury yields rose one basis point to 2.62 percent. Arabica-coffee futures, cocoa and sugar retreated.

Gap Inc. jumped 3.3 percent on an unexpected increase in April sales and Urban Outfitters Inc. rose 2.7 percent. McDonald’s Corp. and Home Depot Inc. led advances in the Dow average. The Treasury market’s yield curve steepened this week by the most since September after Federal Reserve Chair Janet Yellen eased investor concern that policy makers would accelerate interest-rate increases. Companies from Goldman Sachs Group Inc. and to Royal Bank of Scotland Group Plc predicted the European Central Bank will cut interest rates next month.

“The market is just trying to find footing,” Jerry Braakman, chief investment officer of First American Trust in Santa Ana, California, said in a phone interview. His firm manages $1.1 billion. “You’ve seen the market changing its mind throughout the day quite a bit recently. That’s indicative of people trying to search for direction.”

Weekly Losses

The S&P 500 slipped 0.1 percent yesterday, after rising to within two points of a closing record. Today’s advance cut its weekly slide to 0.1 percent.

The Nasdaq Composite Index rose 0.5 percent, paring its drop this week to 1.3 percent, its biggest in a month. Technology shares have led this year’s selloff of companies whose growth are more tied to economic swings after a rally drove valuations to about double that of the S&P 500. The technology-heavy index is trading at 34.3 times reported earnings, compared with a multiple of 17.2 for the broad equity measure.

The Dow Jones Internet Composite Index’s gain halted a three-day slide. Twitter Inc. and Groupon Inc. have lost more than 15 percent this week.

Apple Inc. fell 0.4 percent today. The iPhone maker is in advanced talks to acquire headphone maker and music-streaming service Beats Electronics LLC for $3.2 billion, trading, people with the knowledge of the discussions said.

Yield Curve

The gap between yields on five- and 30-year Treasuries widened 14 basis points on the week to 1.84 percentage points. It was the first increase in four weeks and the biggest since the five days ended Sept. 20.

Five-year notes, more susceptible to changes in Fed rate policy expectations, outperformed 30-year bonds after Yellen told Congress yesterday rates are unlikely to rise unless the recovery is stronger.

The euro extended this week’s loss against the dollar to 0.8 percent, dropping to the lowest level in a month. The shared currency fell 0.5 percent to 140 yen. The yen was little changed at 101.78 per dollar, having gained 0.4 percent this week.

“The Governing Council is comfortable with acting next time, but before we want to see the staff projections that will come out in the early June,” European Central Bank President Mario Draghi said at a press conference in Brussels yesterday. “There wasn’t a decision today. It’s a preview of the discussion we will have next month.”

European Bonds

Spain’s 10-year yield erased losses to rise three basis points to 2.92 percent. It earlier touched 2.85 percent, the lowest since Bloomberg began compiling the data in 1993. Italy’s yield rose three basis points to 2.95 percent after earlier sliding three basis points to 2.89 percent, also a record.

European stocks pared a fourth weekly gain, as the Stoxx 600 climbed 0.2 percent in the past five days. The gauge closed yesterday at its highest level since January 2008 after Draghi’s comments.

Petroleum Geo-Services ASA dropped 5 percent today after the Norwegian surveyor of underwater oil and gas fields posted profit that missed estimates. Vestas Wind Systems A/S rallied 7.6 percent after the world’s biggest wind-turbine maker profit beat analysts’ estimates.

“It’s a mixed picture in terms of earnings,” Philippe Gijsels, chief strategy officer at BNP Paribas Fortis, said by phone from Brussels. “What we got from the ECB yesterday was clearly positive, but underneath the positive tone from the market, there are some worrying issues” on the earnings front, he said.

Ukraine Tension

The European Union is said to be preparing more sanctions against Russia, while separatists in eastern Ukraine pushed ahead with plans for referendums on autonomy. Markets in Russia and Ukraine were closed today.

The MSCI Emerging Markets Index fell less than 0.1 percent, trimming this week’s advance to 0.5 percent. The Hang Seng China Enterprises Index lost 0.5 percent and the Shanghai Composite Index slipped 0.2 percent.

The S&P GSCI gauge of 24 commodities dropped 0.4 percent as coffee slumped 5.9 percent and wheat fell for a third straight day.

Corn futures fell 1.2 percent, the most in a week, on the outlook for rising prices in the U.S., the world’s largest grower and exporter.

Nickel climbed 2.6 percent to settle at $19,095 a metric ton in London, capping the biggest weekly gain since 2010. Prices of the metal used in stainless steel climbed to a two-year high today after Vale SA’s plant in New Caledonia was closed this week and Indonesia banned ore exports in January.

West Texas Intermediate oil decreased 0.3 percent to settle at $99.99 a barrel. Futures climbed earlier in the day on concern about the tension in Ukraine.

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